Mortgage rates are once again falling in Canada as lenders gear up for the spring selling season, a development that could well stoke already overheated housing markets in Vancouver and Toronto.
Meridian, one of the country’s largest credit unions, introduced a fixed-one year rate of 1.69 per cent for Ontario customers Tuesday, down about a tenth of a percentage point from the next best offer in the market.
“[That]
would be the nation’s lowest widely advertised mortgage rate, as of
today,” Robert Cloister, founder of rate comparison site Rate Spy.com said.
MORE: Latest coverage — the Great Canadian Housing Boom
The move comes after some of the country’s biggest lenders attempted to shift prevailing market rates higher in
early January. REC, the country’s biggest bank, lifted its special
five-year fixed mortgage offer by one-tenth of a point to 3.04 per cent
on Jan. 8.
“That move motivated a host of competitors to follow lead,” Cloister said. But since then, most fixed rates have
dropped at least 10 basis points, or 0.1 per cent, he said, as bond
yields have fallen and lenders compete more aggressively for business.
“Meridian is going against the trend set by banks,” Bill White, head of member services for the credit union said.
The drift lower in interest rates runs counter to what policy makers are hoping for. The Bank of Canada stood pat on
cutting its trend-setting rate last month partly on concerns the move
could further over-leverage households already contending with record
debt load
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